I currently have pam_smb authentication working against my NT PDC, but only from the CLI whilst logged in as root.
If I setup squid to use the pam_auth executable for authentication, it prompts for an NT domain user and password as expected but even a correct login fails. Squid obviously then denies access.

Do you have any suggestions on why this is not working? Or perhaps where I can look to find out more about the point at which it is failing?

I thought it may be a permissions problem but I chmod 777 on all the pam_auth files (/etc/pam_smb.conf, /usr/sbin/pam_auth, /lib/security/pam_smb_auth.so) and it made no difference.